It could very well be that in the case of signup bonuses, AA and Citi were sharing that cost (ie, Citi was paying a discounted cost for those miles). After all, one of the purposes of a co-branded card is to encourage you to be a customer of the co-branded company (in this case, AA).

If that's the case and people churn cards then AA is not seeing any increased revenue from those customers, and so they could very well be losing money on them after providing the discounted miles.

I recently got a survey from Citi / AA about the Executive card. It was a comparison of a bunch of potential benefits, AF increases, and potential AU changes. My suspicion is that it's not related to the contract renegotiation though.

I suspect that AA would prefer to keep both card issuers, since presumably it thinks playing them against each other extracts the most money from the banks and from consumers that might have both banks' cards. Neither Citi nor Barclays strikes me as having the kind of drive and vision to pay a bunch of money to be the exclusive issuer (as Amex and to a lesser extent Chase seems to have).